MEC RESOURCES LIMITED — Capital/Financing Update 2010

Sep 7, 2010

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MEC RESOURCES LTD ABN 44 113 900 020

ENTITLEMENT ISSUE PROSPECTUS

For a non-renounceable entitlement issue of one (1) Share for every ten (10) Shares held by Shareholders registered on the Record Date at an issue price of $0.50 per Share to raise approximately $6,017,881.

Important Notice

This document is important and should be read in its entirety. If after reading this Prospectus you have any questions about the Shares being offered under this Prospectus or any other matter, you should consult your stockbroker, accountant or other professional adviser.

The Shares offered by this Prospectus should be considered as speculative.

TABLE OF CONTENTS

1.	DETAILS OF THE OFFER .................................................................................................. 7
2.	PURPOSE AND EFFECT OF THE OFFER ......................................................................... 12
3.	RIGHTS AND LIABILITIES ATTACHING TO SHARES ...................................................... 17
4.	RISK FACTORS ............................................................................................................ 18
5.	ADDITIONAL INFORMATION ...................................................................................... 23
6.	DIRECTORS‟ AUTHORISATION .................................................................................... 31

TIMETABLE AND IMPORTANT DATES

Announcement of Offer and lodgement	of	8 September 2010
Prospectus with the ASIC
Notice to Shareholders and Optionholders		8 September 2010
Ex Date		14 September 2010
Record Date for determining Entitlements		7:00pm AEST 20 September 2010
Opening Date and dispatch of Prospectus		23 September 2010
Closing Date		5:00pm WST 8 October 2010
Shares quoted on a deferred settlement basis		11 October 2010
Notify ASX of under subscriptions		13 October 2010
Allotment and dispatch of holding statements		14 October 2010

• These dates are determined based upon the current expectations of the Directors and may be changed with 6 days‟ prior notice.

IMPORTANT INFORMATION

Investors should read this document in its entirety and, if in doubt, should consult their professional advisers before deciding whether to apply for Shares offered under this Prospectus.

This Prospectus is dated 8 September 2010 and a copy of this Prospectus was lodged with the ASIC on that date. The ASIC and ASX take no responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates.

The Expiry Date of this Prospectus is 5:00pm WST on the date which is 13 months after the date this Prospectus was lodged with the ASIC ( Expiry Date ). No Shares will be allotted or issued on the basis of this Prospectus after the Expiry Date.

No person is authorised to give information or to make any representation in connection with this Prospectus, which is not contained in the Prospectus.

No person named in this Prospectus, nor any other person, guarantees the performance of the Company or the payment of a return on the Shares. Please read this document carefully before you make a decision to accept the Offer. An investment in the Company has specific risks which you should consider before making a decision to invest.

Certain terms and abbreviations used in this Prospectus have defined meanings which are set out in the Glossary.

This Prospectus is a transaction specific prospectus for an offer of continuously quoted securities (as defined in the Corporations Act) and has been prepared in accordance with section 713 of the Corporations Act. It does not contain the same level of disclosure as an initial public offering prospectus. In making representations in this Prospectus, regard has been had to the fact that the Company is a disclosing entity for the purposes of the Corporations Act and certain matters may reasonably be expected to be known to investors and professional advisers whom potential investors may consult.

Electronic Prospectus

This Prospectus will be issued in paper form and as an electronic prospectus. Any person accessing the electronic version of this Prospectus for the purpose of making an investment in the Company must be an Australian resident and must only access the Prospectus from within Australia.

The Corporations Act prohibits any person from passing to another person an Entitlement and Acceptance Form unless it is attached to or accompanies the complete and unaltered version of this Prospectus. Any person may obtain a hard copy of this Prospectus free of charge by contacting the Company. The Prospectus may be viewed online at: www.mecresources.com.au.

Competent person

The technical information provided in this Prospectus has been compiled by Mr Dang Lan Nguyen, a qualified geologist with over 20 years‟ experience. Mr Nguyen is a member of the Society of Petroleum Engineers, the American Association of Petroleum Geologists and the Petroleum Exploration Society of Australia. Mr Nguyen has reviewed the results, procedures and data contained in this Prospectus. Mr Nguyen consents to the inclusion in this Prospectus of the matters based on the technical information in the form and context in which it appears.

Risks

The following table sets out a summary of some of the key risks associated with investing in the Company. This list of risks is not exhaustive. Full details of the risks tabled below and others are set out in Section 4 of this Prospectus.

Risk area	Further details
Risks associated with Advent Energy	4.2

• Illiquid investment

• As Advent Energy is an unlisted entity, there is a risk that there won‟t be a ready market for the Company to sell its Advent Energy shares if it wishes to do so at any time in the future.

• Additional funding

Advent Energy will require access to substantial capital to further identify and develop its substantial portfolio of exploration permits. There is no certainty that Advent Energy will have sufficient funding to pursue its exploration activities.

Oil & gas industry risks

4.3

• Commodity and currency price volatility: Commodity prices inherently fluctuate and are affected by numerous factors beyond the Company‟s control. The fluctuation of the price of oil (and to a lesser extent gas) could have a significant impact on the value of the investment in Advent Energy.

• Exploration, development, mining and processing risks: The ultimate and continuous success of oil and gas exploration, project development and mining is dependent on many factors such as the discovery and/or acquisition of economically recoverable oil and gas deposits; successful conclusions to bankable feasibility studies; design and construction of efficient mining and processing facilities within capital expenditure budgets; and adverse weather conditions over a prolonged period which can adversely affect exploration and mining operations and the timing of revenues.

• Exploration success: There can be no assurance that exploration of the permits, or any other permits that may be acquired in the future by Advent Energy, will result in the discovery of an economic oil and gas. Even if an apparently viable deposit is identified, there is no guarantee that it can be economically exploited.

• Joint venture parties, contractors and agents: The Directors are unable to predict the risk of financial failure or default by a participant in any joint venture to which the Company or Advent Energy may be or may become a party.

• Environmental management: Advent Energy‟s operations are and will be subject to stringent environmental regulation. Environmental regulations are likely to evolve in a manner that will require stricter standards and enforcement, increased fines and penalties for non-compliance and more stringent environmental assessments of proposed projects.

• Title risks: Title to or any interest in the petroleum tenements discussed in this Prospectus could be lost if permit conditions are not met or if insufficient funds are available to meet expenditure commitments.

• Operational and technical risks: The current and future operations of the Company‟s investee entities, including exploration, appraisal and possible production activities may be affected by a range of factors, including

Further details

Risk area

• geological and hydro geological conditions; unanticipated operational and technical difficulties encountered in survey, drilling and production activities; and unexpected shortages or increases in the costs of consumables, diesel fuel, spare parts, plant and equipment.

• Resource estimates: Should the Company‟s investee entities encounter formations different from those predicted by past sampling and drilling, resource estimates may have to be adjusted and mining plans altered in a way which could impact adversely on the Company‟s investment in those entities.

• Unitisation: In the case of any cross-border discovery or cross permit discovery involving another permit holder, Advent Energy will be required to share production in accordance with the requirements of the relevant regulatory authorities of Western Australia, and/or the Northern Territory, and/or South Australia, and/or New South Wales, or of any relevant unitisation agreements agreed to between the parties, as the case may be.

Investors should be aware that an investment in the Company involves risks that may be higher than risks associated with an investment in some other companies. Careful consideration should be given to all matters raised in this Prospectus and the relative risk factors prior to applying for Shares offered for subscription under this Prospectus. Some of these risks can be mitigated by the use of appropriate safeguards and actions, but some are outside the Company‟s control and cannot be mitigated. Investors should consider the risk factors described above and outlined in more detail in Section 4, together with the information contained elsewhere in this Prospectus, before deciding whether to apply for Shares.

CORPORATE DIRECTORY

Directors

Solicitors

Mr Goh Hock Non-Executive Chairman

Mr David Breeze Executive Director

Steinepreis Paganin Level 4, The Read Buildings 16 Milligan Street PERTH WA 6000

Ms Deborah Ambrosini Executive Director

Mr KO Yap

Non-Executive Director

Mr CT Lim

Non-Executive Director

Company Secretary

Auditor

Ms Deborah Ambrosini

Deloitte Touche Tohmatsu Level 14, Woodside Plaza 240 St Georges Terrace PERTH WA 6000

Registered Office

ASX Code

14 View Street NORTH PERTH WA 6006

MMR

Telephone: +61 8 9328 8477 Facsimile: +61 8 9328 8733

Website

Share Registry*

www.mecresources.com.au

Security Transfer Registrars Pty Ltd 770 Canning Highway APPLECROSS WA 6153 PO Box 535 APPLECROSS WA 6953 Telephone: +61 8 9315 2333 Facsimile: +61 8 9315 2233

• These entities have not been involved in the preparation of this Prospectus and have not consented to being named in this Prospectus. Their names are included for information purposes only.

CHAIRMAN‟S LETTER

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Dear Shareholder

MEC Resources is poised to achieve a significant milestone in the history of Australia‟s gas sector. Advent Energy Ltd (MEC‟s investee entity), through wholly owned subsidiary, Asset Energy Pty Ltd, is preparing to drill the first ever exploration well off the coast of Sydney-Newcastle-Wollongong, Australia‟s largest industrialised region and population centre.

The New Seaclem-1 exploration well is targeting the Great White and Marlin prospects which have been estimated to contain a combined 4.1 Tcf undiscovered natural gas resources in place at the P50 or „best estimate‟ level. These figures were estimated by Tanvinh Resources Pty Limited following a review of Advent‟s recently reprocessed seismic data. This target is in addition to the other areas already identified.

The „Ocean Patriot‟ will be towed from waters offshore Victoria to the PEP 11 area. Drilling operations are anticipated to commence in the fourth quarter of 2010 and take approximately 25 days to complete. In the event of success, further appraisal wells will be considered prior to development modelling.

Advent Energy has engaged DU-EL Drilling Services to ensure the exploration well drilling exceeds industry safety standards.

The Board commends this investment opportunity to you and looks forward to your participation in this exciting and historic occasion.

Yours faithfully

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Hock Goh CHAIRMAN

1. DETAILS OF THE OFFER

1.1 Offer

By this Prospectus, the Company offers for subscription approximately 12,035,762 Shares pursuant to a non-renounceable entitlement issue to Shareholders of one Share for every ten (10) Shares held by Shareholders on the Record Date at an issue price of $0.50 per Share. Fractional entitlements will be rounded up to the nearest whole number.

Based on the existing capital structure of the Company (and assuming no existing Options are exercised prior to the Record Date), the maximum number of Shares to be issued pursuant to this Offer is approximately 12,035,762 Shares. The Offer will raise up to approximately $6,017,881. The purpose of the Offer and the use of funds raised are set out in Section 2.1 of this Prospectus.

The Company currently has 51,245,483 listed Options and 9,453,333 unlisted Director and management Options on issue. The terms and conditions of these Options do not allow for the participation by those Option holders in new issues of securities. Those Option holders will, however, be entitled to exercise their Options during the time period set out in the ASX Listing Rules (being 7 Business Days) in order to participate in the Offer.

1.2 Minimum subscription

There is no minimum subscription for this Offer.

1.3 How to accept the Offer

Your acceptance of the Offer must be made on the Entitlement and Acceptance Form accompanying this Prospectus. Your acceptance must not exceed your Entitlement as shown on that form. If it does, your acceptance will be deemed to be for the maximum Entitlement.

You may participate in the Offer as follows:

• (a) if you wish to accept your Entitlement in full:

• (i) complete the Entitlement and Acceptance Form, filling in the details in the spaces provided; and

• (ii) attach your cheque for the amount indicated on the Entitlement and Acceptance Form; or

• (b) if you only wish to accept part of your Entitlement:

• (i) fill in the number of Shares you wish to accept in the space provided on the Entitlement and Acceptance Form; and

• (ii) attach your cheque for the appropriate application moneys (at $0.50 per Share); or

• (c) if you do not wish to accept all or part of your Entitlement, you are not obliged to do anything.

All cheques must be drawn on an Australian bank or bank draft made payable in Australian currency to “ MEC Resources Ltd – Rights Issue ” and crossed “Not Negotiable”.

Your completed Entitlement and Acceptance Form and cheque must reach the Company‟s Share Registry no later than 5:00pm WST on the Closing Date.

The Offer is non-renounceable. Accordingly, a Shareholder may not sell or transfer all or part of their Entitlement.

1.4

Shortfall

The offer of the Shortfall is a separate offer pursuant to this Prospectus. The issue price of any Shortfall Shares shall be not less than $0.50 per Share. Any Entitlement not taken up pursuant to the Offer will form the Shortfall. Acceptance of applications for Shortfall Shares shall be at the sole discretion of the Directors and may result in partial acceptance of applications for Shortfall Shares.

If you wish to participate in the Shortfall Offer, please complete a Shortfall Application Form. If you complete a Shortfall Application Form, you will be advised of the issue price of the Shortfall Shares at time the Shares are allotted. Making an application for Shortfall Shares does not guarantee in any way you will be allotted Shares.

The offer of Shares under the Shortfall is independent from the Offer and will remain open after the Offer has closed for a period not exceeding 3 months. The Directors reserve the right to issue Shortfall Shares at their absolute discretion within three (3) months of the Closing Date.

1.5

ASX listing

Application for official quotation by ASX of the Shares offered pursuant to this Prospectus will be made within 7 days after the date of this Prospectus. If approval is not obtained from ASX before the expiration of 3 months after the date of issue of the Prospectus (or such period as varied by the ASIC), the Company will not issue any Shares and will repay all application moneys for the Shares within the time prescribed under the Corporations Act, without interest.

The fact that ASX may grant official quotation to the Shares is not to be taken in any way as an indication of the merits of the Company or the Shares now offered for subscription.

1.6

Allotment of Shares

All Shares offered pursuant to this Prospectus will be allotted as soon as practicable after the Closing Date. Where the number of Shares issued is less than the number applied for, or where no allotment is made, surplus application moneys will be refunded without any interest to the Applicant as soon as practicable after the Closing Date.

Pending the allotment and issue of the Shares or payment of refunds pursuant to this Prospectus, all application moneys will be held by the Company in trust for the Applicants in a separate bank account as required by the Corporations Act. The Company, however, will be entitled to retain all interest that accrues on the bank account and each Applicant waives the right to claim interest.

1.7 Market price of Shares on ASX

The Company is a disclosing entity for the purposes of the Corporations Act and its Shares are enhanced disclosure securities quoted on ASX.

The highest and lowest market sale prices of the Company‟s Shares on ASX during the 3 months immediately preceding the date of lodgement of this Prospectus with the ASIC and the respective dates of those sales were:

(a) Highest – $0.77 on 23 July 2010; and

(b) Lowest – $0.385 on 30 June 2010.

The latest available closing sale price of the Company‟s Shares on ASX prior to the lodgement of this Prospectus with the ASIC was $0.6 per Share on 8 September 2010.

1.8 No underwriter

The Offer is not underwritten.

1.9

Taxation implications

The Directors do not consider that it is appropriate to give potential Applicants advice regarding the taxation consequences of applying for Shares under this Prospectus, as it is not possible to provide a comprehensive summary of the possible taxation consequences. The Company, its advisers and officers, do not accept any responsibility or liability for any taxation consequences to potential Applicants. Applicants should, therefore, consult their own professional tax adviser in connection with the taxation implications of the Offer.

1.10 Clearing House Electronic Sub-Register System (CHESS) and Issuer Sponsorship

The Company will not be issuing Share certificates. The Company will apply to ASX to participate in CHESS, for those investors who have, or wish to have, a sponsoring stockbroker. Investors who do not wish to participate through CHESS will be issuer sponsored by the Company. Because the sub-registers are electronic, ownership of securities can be transferred without having to rely upon paper documentation.

Electronic registers mean that the Company will not be issuing certificates to investors. Instead, investors will be provided with a statement (similar to a bank account statement) that sets out the number of Shares allotted to them under this Prospectus. The notice will also advise holders of their Holder Identification Number (HIN) and explain, for future reference, the sale and purchase procedures under CHESS and issuer sponsorship.

Further monthly statements will be provided to holders in circumstances in which there have been any changes in their security holding in the Company during the preceding month.

1.11 Privacy Act

If you complete an application for Shares, you will be providing personal information to the Company (directly or through the Company‟s Share Registry). The Company collects holds and will use that information to assess your application, service your needs as a Shareholder, facilitate distribution payments and corporate communications to you as a Shareholder and carry out administration.

The information may also be used from time to time and disclosed to persons inspecting the register, bidders for your securities in the context of takeovers, regulatory bodies, including the Australian Taxation Office, authorised securities brokers, print service providers, mail houses and the Company Share Registry.

You can access, correct and update the personal information that we hold about you. Please contact the Company or its Share Registry if you wish to do so at the relevant contact numbers set out in this Prospectus.

Collection, maintenance and disclosure of certain personal information is governed by legislation including the Privacy Act 1988 (as amended), the Corporations Act and certain rules such as the ASTC Settlement Rules. You should note that if you do not provide the information required on the application for Shares, the Company may not be able to accept or process your application.

1.12 Overseas Shareholders

Only Shareholders who are registered as at 7:00pm AEST on the Record Date with registered addresses in Australia or New Zealand will be able to participate in the Offer. To make the Offer in any other jurisdiction may constitute a violation of application securities laws. The Directors believe that it is unreasonable to make the Offer to Foreign Shareholders, having had regard to the number of Shareholders in the relevant jurisdictions, the number and value of Shares those Shareholders would be offered and the cost of complying with the securities legislation of those jurisdictions.

Accordingly, the Offer is not being made, and no Shares will be issued to, any Shareholders whose registered address is in a country other than Australia or New Zealand. This Prospectus is being sent to Foreign Shareholders for information purposes only. No Entitlement and Acceptance Form will be sent to Foreign Shareholders.

Shareholders resident in New Zealand should consult their professional advisers as to whether any government or other consents are required, or other formalities need to be observed, to enable them to exercise their Entitlements under the Offer.

The Offer to New Zealand investors is a regulated offer made under Australian and New Zealand law. In Australia, this is Chapter 8 of the Corporations Act and the Corporations Regulations 2001. In New Zealand, this is Part 5 of the Securities Act 1978 and the Securities (Mutual Recognition of Securities Offerings – Australia) Regulations 2008.

The Offer and the content of the Prospectus are principally governed by Australian rather than New Zealand law. In the main, the Corporations Act sets out how the Offer must be made.

There are differences in how securities are regulated under Australian law.

The rights, remedies, and compensation arrangements available to New Zealand investors in Australian securities may differ from the rights, remedies, and compensation arrangements for New Zealand securities.

Both the Australian and New Zealand securities regulators have enforcement responsibilities in relation to the Offer. If you need to make a complaint about the Offer, please contact the Securities Commission, Wellington, New Zealand. The Australian and New Zealand regulators will work together to settle your complaint.

The taxation treatment of Australian securities is not the same as for New Zealand securities.

If you are uncertain about whether this investment is appropriate for you, you should seek the advice of an appropriately qualified financial adviser.

The Offer may involve a currency exchange risk. The currency for the Shares is not New Zealand dollars. The value of the Shares will go up or down according to changes in the exchange rate between Australian dollars and New Zealand dollars. These changes may be significant. If you expect to pay any amounts in a currency that is not New Zealand currency, you may incur significant fees in having the funds credited to a New Zealand bank account in New Zealand dollars.

As noted in Section 1.5 of this Prospectus, the Company will apply to the ASX for quotation of the Shares offered under this Prospectus. If quotation is granted, the Shares offered under this Prospectus will be tradable on the ASX. If you wish to trade the Shares through the ASX, you will have to make arrangements for a participant in that market to sell the Shares on your behalf. As the ASX does not operate in New Zealand, the way in which the market operates, the regulation of participants in that market, and the information available to you about the Shares and trading may differ from securities markets that operate in New Zealand.

1.13 Enquiries

Any questions concerning the Offer should be directed to the Company Secretary, Ms Deborah Ambrosini, on +61 8 9328 8477.

2. PURPOSE AND EFFECT OF THE OFFER

2.1 Purpose of the Offer and use of funds raised

The purpose of the Offer is to raise approximately $6,017,881(before expenses of the Offer). The funds raised from the Offer will be used to fund:

• (a) further investment in the Company‟s unlisted subsidiary, Advent Energy, increasing the Company‟s ownership interest to 52.73% and allowing:

• (i) the drilling of PEP 11, offshore NSW; and

• (ii) further development of Advent Energy‟s portfolio of petroleum exploration permits;

• (b) working capital and the pursuit of new and relevant opportunities; and

• (c) cash expenses of the Offer (refer to Section 5.8 of this Prospectus for further details relating to the estimated expenses of the Offer).

Indicative application of funds	Amount ($)
Investment in Advent Energy assisting in development of Advent Energy‟s petroleum exploration assets1	4,500,000
Working capital and to pursue new and relevant opportunities	1,451,845
Cash expenses of the Offer	66,036
Total	6,017,881
Note 1 :Refer to Section 2.5 below for further information on Advent Energy.

If the Company raises less than $6,017,881 (before expenses of the Offer), the funds raised will first be applied towards the cash expenses of the Offer and thereafter in the same proportion as between the further investment in Advent Energy and working capital as set out above. As at the date of this Prospectus, the Company has, and will have following the completion of the Offer, sufficient working capital to meet its short to medium term objectives. Refer to Section 4 of this Prospectus for a discussion of the risks associated with an investment in the Company (including the requirement for further funding).

2.2 Effect of the Offer

The principal effect of the Offer (assuming the Offer is fully subscribed) will be to:

• (a) increase consolidated cash reserves by approximately $5,951,845 after deducting estimated cash expenses of the Offer and assuming all Shares offered under this Prospectus are issued;

• (b) increase the number of Shares on issue from 120,357,611 as at the date of this Prospectus to approximately 132,393,373 Shares.

2.3 Consolidated statement of financial position

Set out below is:

• (a) an unaudited consolidated statement of financial position of the Company as at 31 July 2010; and

• (b) an unaudited pro-forma consolidated statement of financial position of the Company as at 31 July 2010.

The unaudited consolidated statement of financial position as at 31 July 2010 and the unaudited pro-forma consolidated statement of financial position as at 31 July 2010 shown below have been prepared on the basis of the accounting policies normally adopted by the Company. The unaudited pro-forma consolidated statement of financial position has been prepared on the assumption that all Shares pursuant to the Offer in this Prospectus are issued.

The consolidated statements of financial position have been prepared to provide Shareholders with information on the assets and liabilities of the Company and pro-forma assets and liabilities of the Company as noted below. The historical and pro-forma financial information is presented in an abbreviated form, insofar as it does not include all of the disclosures required by Australian Accounting Standards applicable to annual financial statements.

Statement of Financial Position at 31 July 2010 Current Assets Cash and cash equivalents Trade and other receivables Financial Assets Other current assets Total current assets Non-current Assets Capitalised exploration costs Financial assets Other property, plant & Equipment (net) Other Non-current Assets Total non-current assets Total assets Current Liabilities Trade and Other Payables Provisions Financial liabilities Total current liabilities Total Liabilities Net Assets Equity Capital Contributed Equity Option Reserve Retained Profits (accumulated losses) Non-controlling Interest Total Equity

31 July 2010($) Pro Forma 2010($) 19,249,217 25,201,062 59,960 59,960 1,241,199 1,241,199 926,116 926,116 21,476,492 27,428,337 5,805,998 5,805,998 2,158,475 2,158,475 4,855 4,855 22,674 22,674 7,992,002 7,992,002 29,468,494 35,420,339 3,333,309 3,333,309 104,196 104,196 364,328 364,328 3,801,833 3,801,833 3,801,833 3,801,833 25,666,661 31,618,506 13,716,795 19,668,640 254,746 254,746 (7,676,344) (7,676,344) 19,371,464 19,371,464 25,666,661 31,618,506

2.4 Effect on capital structure

A comparative table of changes in the Company‟s capital structure as a consequence of the Offer is set out below, assuming the Offer is fully subscribed:

Shares	Number
Shares currentlyissue	120,357,611
Shares offeredpursuant to this Prospectus	12,035,762
Total Shares on issue on completion of the Offer	132,393,373
Options	Number
Listed Options
Options exercisable at $0.20 on or before 4 July 2013	51,245,483
Unlisted Options
Director Options exercisable at $0.21 on or before 1 Dec 2010	6,500,000
Management Options exercisable at $0.20 on or before 1 Dec 2010	500,000
Management Options exercisable at $0.15 on or before 1 Jun 2013	1,453,333
Management Options exercisable at $0.15 on or before 6 Aug2013	1,000,000
Options offeredpursuant to this Prospectus	Nil
Total unlisted Options	9,453,333
Total Options on issue on completion of the Offer	60,698,816

2.5 Advent Energy

Background on Advent Energy

Advent Energy is an unlisted oil and gas exploration company based in Perth, Western Australia. Advent Energy is seeking equity capital to assist in its exploration objectives.

Advent Energy holds a strong portfolio of exploration assets throughout Australia, with its cornerstone project lying off the coast of NSW in Petroleum Exploration Permit 11 ( PEP 11 ).

Offshore Sydney Basin – PEP 11

Advent Energy‟s interest in PEP 11 is held through its wholly owned subsidiary, Asset Energy Pty Ltd.

Advent Energy is pursuing its option to increase its current 25% interest to an 85% interest in PEP 11 by drilling the first well in this highly prospective permit. Joint venture partner Bounty Oil & Gas NL will thereby reduce their interest from 75% to 15%.

The offshore Sydney Basin is an untested but proven petroleum basin situated along the heavily populated and industrialised central coast of New South Wales. No drilling has taken place in the Offshore Sydney Basin, despite a number of wells drilled in the adjacent Onshore Sydney Basin which have flowed gas or encountered oil shows.

Covered by PEP 11, a 200km long, 8,250km[2] permit, the Offshore Sydney Basin is a significant exploration area with large scale structuring adjacent to the coastline from Wollongong to Newcastle (offshore NSW). Following reviews by Tanvinh Resources Pty Limited of recently reprocessed seismic data, estimates of the prospective recoverable resources comprised in PEP 11 prospects and leads have recently increased to 13.2 Tcf (P50 or „best estimate‟ level) of natural gas. Furthermore, analysis of site survey data over the Great White and Marlin prospects concluded that the geological sequence associated with these prospects is “likely” to contain zone(s) of gas.

The prospectivity of this proven petroleum basin has been further enhanced by the confirmation of the presence of apparent ongoing hydrocarbon seeps. Subbottom profile data, swath bathymetry, seismic and echosounder data collected by Geoscience Australia along the continental slope / permit margin has demonstrated active erosional features in conjunction with geophysical indications of gas escape.

Furthermore, in reviews of its exploration data for the PEP 11 project, Advent has interpreted significant new seismically indicated gas features.

Evaluation of the reprocessed seismic data for Direct Hydrocarbon Indicators ( DHI ) has revealed evidence of Flat Spots, Hydrocarbon Related Diagenetic Zones, and anomalous Amplitude Versus Offset features. These potential DHI have been observed coincident with key targets and increase the confidence for the first exploration well.

Successful exploration and field development of the anticipated volumes of natural gas reported could have a positive impact on New South Wales‟ and Australia‟s energy industry.

Mapped prospects and leads within the Offshore Sydney Basin are generally located less than 50km from Australia‟s largest energy market, the SydneyWollongong-Newcastle greater metropolitan area. This area has a population of approximately 5,000,000 people. Traditionally, all natural gas used in New South Wales has been piped in from South Australia and the Bass Strait. However, studies by the Australian Bureau of Agricultural and Resource Economics and the Australian Petroleum Production and Exploration Association state that those sources may not be able to meet the demand for gas in the medium to longer term.

Although there have been over a thousand wells drilled in offshore Australia, no exploration drilling has ever taken place in the Offshore Sydney Basin.

Advent has contracted the Ocean Patriot semi-submersible drilling rig to drill the first well in PEP 11. The Ocean Patriot is due to drill two wells in Bass Strait, offshore Victoria for another major operator prior to commencing work for Advent. The exact timing of that two well program is to be determined and it is currently anticipated that the rig will be available in the fourth quarter of 2010. Refer to Section 5.1 of this Prospectus for further details of the Drilling Agreement.

Advent has commenced the lodgement of appropriate approval documents with relevant NSW and Commonwealth government departments and agencies.

The New Seaclem-1 well will target the Great White and Marlin prospects, with a combined prospective gas resource estimate of 4.1 Tcf (gas in place, P50 level).

Exmouth Sub-Basin Region of the Carnarvon Basin

Advent Energy has an 8.3% interest (Permit Operator: Strike Energy Ltd) in a shallow, near shore permit in the Exmouth sub-Basin region of the Carnarvon Basin, which contains the undeveloped Rivoli Gas Field discovery. The Rivoli Joint Venture is considering a proposal to develop the Rivoli Gas Field to supply gas to nearby infrastructure at Exmouth.

Onshore Bonaparte Basin

Advent Energy holds EP 386 and RL 1 in the onshore Bonaparte Basin in Northern Australia. The Bonaparte Basin is a hydrocarbon-bearing sedimentary basin straddling the border between the Northern Territory and Western Australia. Most of the basin is located offshore, covering 250,000 square kilometres, compared to just over 20,000 square kilometres onshore.

Advent Energy holds 100% of Exploration Permit EP 386 (4,760 square kilometres in area) which covers the entire Western Australian section of the onshore Bonaparte Basin. Since 1960, twelve wells have been drilled in or near EP 386 and only sixteen in the whole of the onshore basin. Although no commercial fields have been discovered yet, six exploration wells are classified as gas discoveries. The tenements contain five sub-commercial gas fields which may be able to be advanced to commercial status with additional work, in particular the Garimala Gas Field which may have an areal extent of more than 10km[2] . Three modest gas discoveries have been made along the western edge of the onshore Bonaparte Basin, in an area characterised by a structural-stratigraphic trapping and active migration known as the Waggon Creek Embayment.

In the Northern Territory, Advent Energy holds 100% of Retention Lease RL-1 (166 square kilometres in area), which covers the Weaber Gas Field and two related prospects, Weaber North and Weaber Southwest. Geoscience Australia has estimated that the Weaber field contains 4.3 million barrels of oil equivalent.

Reports received by Advent Energy confirm that upon investigation of well completion reports and drill stem testing data from EP 386 and RL1 wells, there is a strong evidence from pressure data that there is considerable upside potential in the area if drilling damage can be avoided. Advent has initiated a multiphased study to address methods of minimising formation damage and significantly improve gas flow rates for future exploration and potential development.

Central Petroleum

Advent Energy holds a large shareholding in an ASX-listed Australian onshore hydrocarbon explorer, Central Petroleum Ltd ( Central Petroleum ) (ASX: CTP).

Central Petroleum is actively exploring in its exploration tenements that cover approximately 250,000km[2] of central Australia.

3. RIGHTS AND LIABILITIES ATTACHING TO SHARES

The following is a summary of the more significant rights and liabilities attaching to Shares. Full details of the rights attaching to Shares are set out in the Company‟s Constitution, a copy of which is available for inspection at the Company‟s registered office during normal business hours.

The rights, privileges and restrictions attaching to Shares can be summarised as follows:

(a) Notice of meetings

Each Shareholder is entitled to receive notice of general meetings of the Company. Except in certain circumstances, Shareholders are entitled to be present in person, or by proxy, attorney or representative to speak or to vote at general meetings of the Company or to join in demanding a poll. Shareholders may requisition general meetings in accordance with the Corporations Act.

(b)

Voting

At a general meeting, on a show of hands, every person present who is either a member, a proxy, an attorney or a representative of a Shareholder, has one vote. At the taking of a poll, every Shareholder present in person or by proxy, attorney or representative has one vote for each Share held.

(c)

Dividends

The Directors may from time to time authorise and pay dividends out of the profits of the Company. Dividends are payable in proportion to the number of Shares held by Shareholders.

(d)

Winding up

If the Company is wound up, the liquidator may, with the sanction of a special resolution, divide among the Shareholders the whole or any part of the Company‟s property. The liquidator may also, with the sanction of a special resolution, vest the whole or any part of the property in a trustee on trust for Shareholders.

(e)

Transfer of Shares

A Shareholder may transfer Shares by a written transfer or by a transfer effected under a computerised or electronic system recognised by the Listing Rules or by the Corporations Act. The Directors may refuse to register a Share transfer where the Listing Rules permit the Company to do so. On any refusal to register a Share transfer, the Company must give written notice to the transferee and the reasons for the refusal.

(f)

Allotment of Shares

The Directors may, subject to the Constitution, allot new Shares with such terms and conditions as they think fit.

4. RISK FACTORS

4.1 General

The Shares offered under this Prospectus should be considered speculative.

The Company‟s business activities are subject to various risks that may impact on the Company‟s future performance. Some of these risks can be mitigated by the use of safeguards and appropriate systems and controls, but some are outside the Company‟s control and cannot be mitigated. Accordingly, an investment in the Company carries no guarantee with respect to the payment of dividends, return of capital or price at which Shares will trade.

A number of material risk factors are set out below. This list is not exhaustive and potential Applicants should examine the contents of this Prospectus and consult their professional advisers before deciding whether to apply for Shares.

4.2 Risks associated with Advent Energy

Illiquid investment

As Advent Energy is an unlisted entity, there is a risk that there won‟t be a ready market for the Company to sell its Advent Energy shares if it wishes to do so at any time in the future.

Additional funding

Advent Energy will require access to substantial capital to further identify and develop its substantial portfolio of exploration permits. There is no certainty that Advent Energy will have sufficient funding to pursue its exploration activities. Its ability to obtain additional funding will depend upon a number of factors, including the extent of its ability to generate income from activities which it cannot forecast with any certainty.

4.3 Oil & gas industry risks

Commodity and currency price volatility

Commodity prices inherently fluctuate and are affected by numerous factors beyond the Company‟s control, including world demand for particular commodities, forward selling by producers and the level of production costs in major commodity producing regions. Moreover, commodity prices are also affected by macroeconomic factors such as expectations regarding inflation, interest rates and global and regional demand for, and supply of, a commodity. Commodities are principally sold throughout the world in US dollars. The fluctuation of the price of oil (and to a lesser extent gas) could have a significant impact on the value of the investment being considered. As a result, any significant and/or sustained fluctuations in the exchange rate between the Australian dollar and the US dollar and/or adverse movements in commodity prices (in particular, oil and/or gas), could have a materially adverse effect on the Company‟s investment in Advent Energy.

Exploration, development, mining and processing risks

Oil and gas exploration, project development and mining by their nature contain elements of significant risk. The ultimate and continuous success of these activities is dependent on many factors such as:

• (a) the discovery and/or acquisition of economically recoverable oil and gas deposits;

• (b) successful conclusions to bankable feasibility studies;

• (c) access to adequate capital for project development;

• (d) design and construction of efficient mining and processing facilities within capital expenditure budgets;

• (e) securing and maintaining title to permits;

• (f) obtaining consents and approvals necessary for the conduct of exploration and mining;

• (g) access to competent operational management, including the availability and reliability of appropriately skilled and experienced employees, contractors and consultants;

• (h) native title risks;

• (i) adverse weather conditions over a prolonged period, which can adversely affect exploration and mining operations and the timing of revenues; and

• (j) oil and gas is an industry that has become subject to increasing environmental responsibility and liability. The potential for liability is an ever present risk. The use and disposal of chemicals in the mining industry is under constant legislative scrutiny and regulation.

Exploration success

The petroleum permits described in this Prospectus are at various stages of exploration, and potential investors should understand that petroleum exploration and development are high-risk undertakings.

There can be no assurance that exploration of the permits, or any other permits that may be acquired in the future, will result in the discovery of an economic oil and gas. Even if an apparently viable deposit is identified, there is no guarantee that it can be economically exploited.

Exploration costs are based on certain assumptions with respect to the method and timing of exploration. By their nature, these estimates and assumptions are subject to significant uncertainties and, accordingly, the actual costs may materially differ from any estimates and assumptions. Accordingly, no assurance can be given that the cost estimates and the underlying assumptions will be realised in practice, which may materially and adversely affect the Company‟s investment in Advent Energy.

Joint venture parties, contractors and agents

The Directors are unable to predict the risk of financial failure or default by a participant in any joint venture to which the Company or Advent Energy may be or may become a party; or insolvency or other managerial failure by any of the contractors used by the Company in any of its activities; or insolvency or other managerial failure by any of the other service providers used by the Company for any activity.

Environmental management

Advent Energy‟s operations are and will be subject to stringent environmental regulation. Environmental regulations are likely to evolve in a manner that will require stricter standards and enforcement, increased fines and penalties for non-compliance and more stringent environmental assessments of proposed projects. Environmental regulations could impact on the viability of Advent‟s projects. Advent Energy may become subject to liability for pollution or other hazards against which it has not insured or cannot insure, including those in respect of past mining or other activities for which it was not responsible.

Title risks and Native title

Interests in Australian petroleum tenements are governed by the respective State legislation and are evidenced by the granting of permits or licences. Each permit or licence is for a specific term and carries with it annual expenditure and reporting commitments, as well as other conditions requiring compliance. Consequently, title to or any interest in the petroleum tenements discussed in this Prospectus could be lost if permit conditions are not met or if insufficient funds are available to meet expenditure commitments.

It is also possible that, in relation to the petroleum tenements that Advent Energy or Central Petroleum have an interest in or will in the future acquire such an interest, there may be areas over which legitimate common law native title rights of Aboriginal Australians exist. If native title rights do exist, the ability to gain access to tenements (through obtaining consent of any relevant landowner), or to progress from the exploration phase to the development and production phases of operations may be adversely affected.

The Directors will closely monitor the potential effect of native title claims involving petroleum tenements in which the Company has or may have an indirect interest.

Operational and technical risks

The current and future operations of the Company‟s investee entities, including exploration, appraisal and possible production activities may be affected by a range of factors, including:

• (a) geological and hydro geological conditions;

• (b) limitations on activities due to seasonal weather patterns and cyclone activity;

• (c) alterations to joint venture programs and budgets;

• (d) unanticipated operational and technical difficulties encountered in survey, drilling and production activities;

• (e) electrical and mechanical failure of operating plant and equipment, industrial and environmental accidents, industrial disputes and other force majeure events;

• (f) unavailability of aircraft or drilling equipment to undertake airborne surveys and other geological and geophysical investigations;

• (g) unavailability of shipping load space to transport product to overseas buyers;

• (h) unavailability of train and/or truck haulage services for the transport of product;

• (i) the supply and cost of skilled labour;

• (j) unexpected shortages or increases in the costs of consumables, diesel fuel, spare parts, plant and equipment; and

• (k) prevention or restriction of access by reason of political unrest, outbreak of hostilities and inability to obtain consents or approvals (including clearance of work programs pursuant to the existing and any future access agreements entered into with the registered Aboriginal Land Council and the Native Title claimants).

Resource estimates

Resource estimates are expressions of judgement based on knowledge, experience and industry practice. Estimates which were valid when made may change significantly when new information becomes available. In addition, resource estimates are imprecise and depend to some extent on interpretations, which may prove to be inaccurate. Should the Company‟s investee entities encounter formations different from those predicted by past sampling and drilling, resource estimates may have to be adjusted and mining plans altered in a way which could impact adversely on the Company‟s investment in those entities.

Unitisation

In the case of any cross-border discovery or cross permit discovery involving another permit holder, Advent Energy will be required to share production in accordance with the requirements of the relevant regulatory authorities of Western Australia, and/or the Northern Territory, and/or South Australia, and/or New South Wales, or of any relevant unitisation agreements agreed to between the parties, as the case may be.

4.4 Economic risks

General economic conditions, movements in interest and inflation rates and currency exchange rates may have an adverse effect on the Company‟s development and commercialisation activities, as well as on its ability to fund those activities.

4.5 Reliance on key personnel

The Company is reliant on its management. The loss of one or more of these individuals could adversely affect the Company.

In addition, the Company‟s ability to manage growth effectively will require it to continue to implement and improve its management systems and to recruit and train new employees and consultants. Although the Company expects to be able to do so in the future, there can be no assurance that the Company will be able to attract and retain skilled and experienced personnel and consultants.

4.6 Insurance

The Company will have insurance in place considered appropriate for the Company‟s needs. The Company will not be insured against all possible losses, either because of the unavailability of cover or because the Directors believe the premiums are excessive relative to the benefits that would accrue. The Directors believe that the insurance the Company has in place is appropriate. The Directors will continue to review the insurance cover in place to ensure that it is adequate.

4.7 Access to infrastructure

Advent Energy will require access to processing and gas or liquids transmission facilities, including pipelines, in order to commercially exploit any hydrocarbons discovered. Third-party access to such infrastructure may depend on the level of uncontracted capacity available from time to time. Access to processing plant is likely to depend on the successful negotiation of commercial arrangements with the owner of such plant.

4.8 Investment speculative

The above list of risk factors should not to be taken as exhaustive of the risks faced by the Company or by investors in the Company. The above factors and others not specifically referred to above, may in the future materially affect the financial performance of the Company and the value of the Shares offered under this Prospectus. Therefore, the Shares to be issued pursuant to this Prospectus carry no guarantee with respect to the payment of dividends, return of capital or the market value of those Shares.

Potential investors should consider that the investment in the Company is speculative and should consult their professional advisers before deciding whether to apply for Shares.

5. ADDITIONAL INFORMATION

5.1 Material agreements

Drilling Agreement and Assignment Agreement for the „Ocean Patriot‟

On 29 June 2007, Apache Energy Limited ( Operator ) and Diamond Offshore (Australia) LLC ( Contractor ) entered into a Drilling Agreement whereby the Contractor was engaged by the Operator to carry out drilling and associated services using the drilling unit vessel the „Ocean Patriot‟ and provide equipment and personnel for the purpose of completing certain drilling operations on the Operator‟s behalf ( Drilling Agreement ).

Under the Assignment Agreement for the „Ocean Patriot‟ dated on or about 28 April 2010 ( Assignment Agreement ), the Contractor and the Operator have agreed to assign the Drilling Agreement to Asset Energy (Advent Energy‟s wholly owned subsidiary) for the purpose of Asset Energy‟s drilling program and to reassign the Drilling Agreement to the Operator at the end of the drilling program.

The material terms of the Drilling Agreement and the Assignment Agreement are as follows:

• (a) ( Assignment ): The assignment period commences between 28 June 2010 and 28 September 2010 or such other date as agreed. The Operator must give Asset Energy 60 days‟ prior notice of the expected time of assignment. Asset Energy must redeliver possession of the drilling unit to the Operator at the end of the assignment period and give the Operator at least 15 days‟ prior notice of the expected time of reassignment. The assignment period must not extend beyond the expiry date of the Drilling Agreement (refer to paragraph (b) below). During the assignment period, Asset Energy is deemed the operator under the Drilling Agreement.

• (b) ( Term of Drilling Agreement ): The Drilling Agreement continues for a period of 2 years after its commencement date, plus:

• (i) the remainder of the term of the Offshore Drilling Services Agreement between the Contractor and Santos Limited dated 3 July 2006 (as assigned to the Operator);

• (ii) the period of time required to complete the well in progress on expiry of the term (provided the Operator does not commence a new well within 7 days of the expiry of the term without the Contractor‟s approval), up to a maximum of 60 days unless otherwise agreed;

• (iii) the period of demobilisation to Darwin (or a point of no greater distance), to the extent a demobilisation rate is payable; and

• (iv) until „rig release‟, being the time at which the rig is delivered to port or to its subsequent area of operation.

• (c) ( Title and risk ): The Operator assigns all its right, title and interest in the Drilling Agreement to Asset Energy on and from the assignment and until reassignment. On and from reassignment, Asset Energy assigns all its right, title and interest in the Drilling Agreement back to the Operator.

• (d) ( Drilling ): On and from the day falling 30 days after the assignment time, Asset Energy must not commence drilling a new well under the Drilling Agreement without the Operator‟s prior written consent. In addition, Asset Energy must not commence a new well within 15 days of the expiry of the assignment period without the Operator‟s prior written consent.

• (e) ( Fees ): Asset Energy must pay daily Operator rates to the Contractor for the assignment period in accordance with a schedule of rates.

• (f) ( Release by Contractor ): In consideration for the assignment of the Drilling Agreement to Asset Energy, the Contractor releases the Operator from all claims and obligations under the Drilling Agreement during the assignment period, except for those relating to operations prior to the assignment time. In consideration for the reassignment by Asset Energy to the Operator, the Contractor releases Asset Energy from all claims and obligations under the Drilling Agreement after the assignment period, except for those arising during the assignment period.

• (g) ( Assignment i ndemnity ): Asset Energy indemnifies the Operator in respect of all claims and obligations under the Drilling Agreement or in connection with the Assignment Agreement during the assignment period.

• (h) ( Warranties ): The Operator warrants to Asset Energy that it has complied with all of its obligations under the Drilling Agreement. Asset Energy warrants to the Operator that it has the financial capacity to comply with its obligations under the Drilling Agreement.

• (i) ( Suspension of contractors ): During the assignment period, Asset Energy is entitled to require the Operator to suspend the services of its contractors providing services to the drilling unit and must indemnify the Operator against any claims or obligations arising from the suspension and reinstatement of the services of the Operator‟s contractors to the drilling unit.

• (j) ( Termination ): Each party is entitled to terminate the Assignment Agreement by written notice if the drilling unit is determined to be a total loss under the Drilling Agreement. The Drilling Agreement may be terminated in a number of circumstances, including due to total loss of the rig, by reason of force majeure, due to industrial action, changes in laws, continuous shutdown, Operator‟s non-payment and otherwise for cause (such as non-performance). During the assignment period, Asset Energy and the Contractor must give the Operator 15 days‟ notice of intention to terminate the Drilling Agreement, with written reasons for doing so.

• (k) ( Insurance ): During the assignment period, Asset Energy must maintain insurance as would normally be carried by a prudent oil and gas company to cover liability under the Drilling Agreement. All insurance policies (except for Workers‟ Compensation) must name the Contractor group as additional insureds and all policies must provide that the underwriters waive their rights of subrogation against the Contractor group.

• (l) ( Liability and Indemnity ):

• (i) ( Marine, sub-sea and in-hole equipment ): The Operator must reimburse the Contractor for any loss or damage to the Contractor‟s marine equipment, sub-sea equipment or in-hole equipment provided the loss or damage is not caused by the Contractor‟s negligence and provided it is not recoverable from the Contractor‟s insurers.

• (ii) ( Reimbursement ): The Operator‟s maximum liability to the Contractor is the lesser of the depreciated value of the drilling damaged equipment, the cost to repair or replace lost or damaged equipment or US$3 million per occurrence or series of events constituting a single occurrence.

• (iii) ( Loss of hole ): The Operator indemnifies the Contractor group for any loss arising from loss of a hole, except where the loss is caused by the sole negligence of the Contractor Group.

• (iv) ( Operators right to preserve the well ): The Operator bears the entire costs and expense of killing a well that is out of control or bringing it under control and indemnifies the Contractor from any loss even if caused by the Contractor group‟s negligence.

• (v) ( Pollution ): The Operator is responsible for and indemnifies the Contractor against all loss of every kind arising directly or indirectly from pollution or contamination (save for pollution or contamination which originates above the surface of the water from spills within the Contractor‟s control).

• (vi) ( General indemnity provisions ): The Operator indemnifies the Contractor from all loss arising from injury to people caused by the Contractor and damage to property caused by the Contractor.

• (vii) ( Patent indemnity ): The Contractor indemnifies the Operator from, and must keep the Operator‟s equipment, wells and work free and clear of all liens, claims assessments, fines and levies created, caused or committed by the Contractor or the Contractor‟s personnel.

• (viii) ( Operator‟s well indemnity ): The Operator indemnifies the Contractor from all loss arising from:

  • (A) damage caused to underground reservoirs, strata or formations; and

  • (B) loss of hydrocarbons or other minerals before their ascertainment above the seabed.

• (ix) ( Consequential loss ): No party is liable to the other under the Drilling Agreement or the Assignment Agreement for indirect or consequential loss or damage.

• (m) ( Assignment Indemnity ): Asset Energy shall be responsible for, and agrees to release and hold the Operator harmless from, all claims and obligations under the Drilling Agreement or in connection with the assignment including, but not limited to, payments to the Contractor under the Drilling Agreement on and from the assignment until reassignment.

• (n) ( Dispute resolution ): The Drilling Agreement sets out alternative dispute resolution procedures which commence with senior executive negotiation and escalate to litigation.

• (o) ( Governing law ): The Drilling Agreement and Assignment Agreement are governed by Western Australian law.

Advent Share Sale Agreement

Pursuant to a Share Sale Agreement dated 21 July 2010 between the Company and BPH Corporate Ltd ( BPH ), the Company has agreed to sell 3 million ordinary, fully paid shares in the capital of Advent Energy to BPH in consideration for the issue to the Company of 18,750,000 ordinary, fully paid shares in the capital of BPH ( Advent Share Sale Agreement ).

The sale and purchase of the Advent Energy shares under the Advent Share Sale Agreement is subject to BPH obtaining all necessary shareholder approvals required by the Corporations Act and the ASX Listing Rules in relation to the transaction. BPH has convened a general meeting to be held on 4 October 2010 to seek the necessary approvals in respect of the Advent Share Sale Agreement.

The Advent Share Sale Agreement otherwise contains terms and conditions considered standard for an agreement of this nature.

Du-El Drilling Services Agreement

Pursuant to an agreement between Advent Energy and DU-EL Drilling Pty Ltd ( DU-EL ) dated 1 May 2009, Advent Energy has engaged DU-EL to provide the services of a senior drilling engineer and a technical assistant (together the Consultants ) in support of Advent Energy‟s operations to ensure the exploration well drilling occurs in accordance with industry safety standards ( Services Agreement ). The fees payable for the Consultants‟ services are payable by Advent Energy in accordance with a schedule of rates. The Services Agreement commenced on 1 March 2009 and continues by mutual agreement between Advent Energy and DU-EL. Advent Energy is entitled to terminate the Services Agreement at any time without liability to DU-EL, save for payment of any services performed as at the termination date.

5.2 Continuous disclosure obligations

This document is issued pursuant to section 713 of the Corporations Act as a “transaction specific prospectus”. In general terms transaction specific prospectuses are only required to contain information in relation to the effect of the issue of Shares on the Company and the rights attaching to the Shares. It is not necessary to include general information in relation to all of the assets and liabilities, financial position, profits and losses or prospects of the issuing company.

Section 713 of the Corporations Act enables companies to issue transaction specific prospectuses where those companies are and have been “disclosing entities” for a period of 12 months.

The Company is a “disclosing entity” (as defined in Section 111AC of the Corporations Act) and, as such, is subject to regular reporting and disclosure requirements. As a listed company, the Company is subject to the Listing Rules that require it to immediately notify ASX of any information concerning the Company of which it is or becomes aware and which a reasonable person

would expect to have a material effect on the price or value of Shares. The Shares offered pursuant to this Prospectus are of a class that has been continuously quoted on ASX for at least 12 months prior to the date of issue of this Prospectus.

Copies of documents lodged in relation to the Company with the ASIC may be obtained from or inspected at any office of the ASIC.

Having taken such precautions and having made such enquires as are reasonable, the Company believes that it has complied with the general and specific requirements of ASX as applicable from time to time throughout the 12 months before the issue of this Prospectus which required the Company to notify ASX of information about specified events or matters as they arise for the purpose of ASX making that information available to the stock market conducted by ASX.

Information that is already in the public domain has not been reported in this document, other than that which is considered necessary to make this document complete.

The Company will provide a copy of each of the following documents free of charge, to any person on request during the application period in relation to this document:

• (a) the Annual Report of the Company most recently lodged with the ASIC;

• (b) any half year financial report lodged with ASIC by the Company after the lodgement of the Company‟s 2010 Annual Financial Report and before the lodgement of this Prospectus with the ASIC; and

• (c) any continuous disclosure given by the Company after the lodgement of that Annual Report and before lodgement of this document with ASIC.

For details of announcements lodged with the ASX since the date of lodgement of the 2010 Annual Report, refer to the table set out below:

Date	Announcement
07/09/2010	Change in substantial holding for BPH
01/09/2010	Appendix 3B
31/08/2010	Advent Energy Ltd – PEP 11 Drilling Update
27/08/2010	PEP 11 – Well Location Chosen
26/08/2010	Appendix 3B
25/08/2010	Appendix 3B

ASX maintains files containing publicly available information for all listed companies. The Company‟s file is available for inspection at ASX during normal office hours. The announcements are also available through the Company‟s website at: www.mecresources.com.au.

5.3 No underwriting

The Offer is not underwritten.

5.4 Consents

The following parties have given and have not withdrawn their written consent to being named in this Prospectus in the form and context in which they are named. They have not authorised or caused the issue of this Prospectus and do not accept any liability to any persons in respect of any false or misleading statement in, or omission from, any part of this Prospectus:

• (a) Steinepreis Paganin, as the solicitors to the Company; and

• (b) Deloitte Touche Tohmatsu, as the Company‟s auditors.

5.5 Directors‟ interests and remuneration of Directors

Other than as set out below or elsewhere in this Prospectus, no Director nor any firm in which such a Director is a partner, has or had within 2 years before the lodgement of this Prospectus with the ASIC, any interest in:

• (a) the promotion or formation of the Company;

• (b) property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the offer of Shares pursuant to this Prospectus; or

• (c) the offer of Shares pursuant to this Prospectus,

and no amounts have been paid or agreed to be paid (in cash or shares or otherwise) to any Director or to any firm in which any such Director is a partner, either to induce them to become, or to qualify them as, a Director or otherwise for services rendered by them or by the firm in connection with the promotion or formation of the Company.

The Directors‟ interests in Shares and Options at the date of this Prospectus are:

Directors	Shares	Unlisted Options	Listed Options
Hock Goh	5,135,598	Nil	4,725,144
David Breeze	10,183,654	3,000,000	7,608,228
Deborah Ambrosini	Nil	800,000	Nil
KO Yap	4,039,350	Nil	3,000,000
CT Lim	3,434,350	Nil	2,062,500

The Constitution of the Company provides that the non-executive Directors may be paid for their services as Directors, a sum not exceeding such fixed sum per annum as may be determined by the Company in general meeting (currently set at $250,000), to be divided among the Directors and in default of agreement then in equal shares.

Directors, companies associated with the Directors or their associates are also reimbursed for all reasonable expenses incurred in the course of conducting their duties, which include, but are not in any way limited to, out of pocket expenses, travelling expenses, disbursements made on behalf of the Company and other miscellaneous expenses.

No non-executive Director shall be paid as part or whole of their remuneration a commission on or a percentage of profits or operating revenue.

If a Director is called upon to perform extra services or make any special exertions on behalf of the Company or its business, the Directors may remunerate that Director in accordance with such services or exertions, and such remuneration may be either in addition to or in substitution for the remuneration provided in the form of Director‟s fees.

The table below sets out the remuneration provided to the Directors and their associated companies during the last financial year prior to the date of this Prospectus and their current remuneration as at the date of this Prospectus, inclusive of Director‟s fees and consultancy fees.

Director	Year Ended 30 June 2010 ($)	Year Ended 30 June 2010 ($)	30 June 2010 – Current ($)
Hock Goh		50,000	50,000
David Breeze		115,000	115,000
Deborah Ambrosini		12,500	25,000
KO Yap		25,000	25,000
CT Lim		25,000	25,000

5.6 Legal proceedings

There is no litigation, arbitration or proceeding pending against or involving the Company as at the date of this Prospectus.

5.7 Interests of experts and advisers

Other than as set out below or elsewhere in this Prospectus, no expert or adviser nor any firm in which such an expert or adviser is a partner, has or had within 2 years before the lodgement of this Prospectus with the ASIC, any interest in:

• (a) the promotion or formation of the Company;

• (b) property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the offer of Shares pursuant to this Prospectus; or

• (c) the offer of Shares pursuant to this Prospectus,

and no amounts have been paid or agreed to be paid (in cash or shares or otherwise) to any expert or adviser or to any firm in which any such expert or adviser is a partner, either to induce them to become, or to qualify them as, an expert or adviser or otherwise for services rendered by them or by the firm in connection with the promotion or formation of the Company.

Steinepreis Paganin act as solicitors to the Company. Steinepreis Paganin will be paid approximately $25,000 for services in relation to this Prospectus. In the past two years, Steinepreis Paganin have been paid $20,727.50 (plus GST and disbursements) by the Company for professional services.

5.8 Expenses of the Offer

The estimated expenses of the Offer (excluding GST) are as follows:

Expense	Amount ($)
ASIC fees	2,068
Printing, mailing and other expenses	20,000
ASX fees	18,968
Legal fees	25,000
Total	66,036

6. DIRECTORS‟ AUTHORISATION

This Prospectus is issued by the Company and its issue has been authorised by a resolution of the Directors.

In accordance with Section 720 of the Corporations Act, each Director has consented to the lodgement of this Prospectus with the ASIC.

Dated the 8[th] day of September 2010

---

Ms Deborah Ambrosini Executive Director For and on behalf of MEC Resources Ltd

GLOSSARY

Advent or Advent Energy means Advent Energy Ltd (ABN 39 109 955 400).

AEST means Australian Eastern Standard Time as observed in Sydney, New South Wales.

Applicant means an investor who applies for Shares pursuant to the Offer.

ASIC means the Australian Securities and Investments Commission.

Asset Energy means Asset Energy Pty Ltd (ACN 120 013 390), being an entity wholly owned by Advent Energy.

ASX means, as the context requires, ASX Limited (ACN 008 624 691) or the financial market operated by ASX Limited.

Business Day means a day on which trading takes place on ASX.

Closing Date means the closing date of the Offer, being the date set out in the „Timetable and Important Dates‟ Section of this Prospectus.

Company or MEC means MEC Resources Ltd (ABN 44 113 900 020).

Constitution means the Company‟s Constitution as at the date of this Prospectus.

Corporations Act means the Corporations Act 2001 (Cth).

Directors means the directors of the Company at the date of this Prospectus.

Dollar or “$” means Australian dollars.

Entitlement means a Shareholder‟s entitlement to the Shares offered under this Prospectus.

Entitlement and Acceptance Form means the entitlement and acceptance form either attached to or accompanying this Prospectus.

Foreign Shareholder means a person registered as a Shareholder as at the Record Date whose registered address is outside Australia or New Zealand.

Grandbridge means Grandbridge Limited (ACN 089 311 026).

Listing Rules or ASX Listing Rules means the Listing Rules of ASX.

Offer or Entitlement Issue means the non-renounceable entitlement issue of one (1) Share for every ten (10) Shares held on the Record Date.

PEP 11 means Petroleum Exploration Permit 11, located offshore New South Wales in the offshore Sydney Basin.

Prospectus means this prospectus.

Record Date means the date set out in the „Timetable and Important Dates‟ Section of this Prospectus.

Section means a section in this Prospectus.

Security means Shares and Options.

Share means a fully paid ordinary share in the capital of the Company.

Share Registry means Security Transfer Registrars Pty Ltd (ACN 008 894 488).

Shareholder means a shareholder of the Company.

Shortfall means the Shares (if any) not taken up under the Entitlement Issue.

Shortfall Application Form means the shortfall application form either attached to or accompanying this Prospectus.

Strike Energy means Strike Energy Limited (ABN 59 078 012 745).

WST means Western Standard Time as observed in Perth, Western Australia.

[ENTITLEMENT AND ACCEPTANCE FORM]

[SHORTFALL APPLICATION FORM]